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Oman LNG back in top gear

The start of production from a giant onshore gasfield in September has given a boost to the country's liquefied natural gas sector

The Khazzan gas project, operated by BP, will produce 1.5bn cubic feet a day when the first two phases are on stream, equivalent to 40% of Oman's gas supply. One of the first companies to feel the benefit has been Oman LNG. Chief executive Harib al-Kitani, told Petroleum Economist on the sidelines of its Awards 2017 ceremony in London that "our three trains are now almost at full capacity of 10.5m tonnes a year. This is a great improvement compared to recent years-we'd been running the plant at 75% capacity. But from September we received more production from the upstream".

The Omani government allocates OLNG supplies from a number of Omani gasfields. Over recent years, fast-rising domestic gas demand has forced the government to hold back some of the allocations for LNG exports, thus the drop in output. Now, OLNG is receiving extra supplies direct from Khazzan. This is "topping up from production from the upstream and enabling us almost to reach capacity", Kitani said.

So, after a few bumpy years, which saw the company's revenue decline, the prospects are much brighter. "Financially, 2017 wasn't bad, better than 2016," the OLNG chief executive said. "But 2018 will be a full year of full production. So it will be a boost for our finances as well."

In the period when OLNG's three liquefaction trains at Balhaf on the Indian Ocean coast were operating below capacity, Oman began talks with Iran with the aim of importing gas via a pipeline from there. The gas would then be liquefied by OLNG for export. Kitani said the issue was one between the two governments. OLNG wasn't involved in the discussions because it's role would only be to liquefy the gas.

But with Oman's output back at capacity, would it be able to handle the Iranian gas? "At the moment, no," Kitani said. "Because we're committed to the new gas from Khazzan until 2025. After 2025 there'll be capacity." In the event that the deal goes ahead sooner, "the government will have to re-juggle which gas they use for what. They could pull some gas out and use Iranian gas, or use that for something else".

In any event, Khazzan has proved to be a timely project, and for now OLNG has nothing to worry about. "The government has found more gas, we're filling up the plant and everything's fine," Kitani said.

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